Activist investor accuses The Works of unfairly swaying crucial vote

The activist investor seeking to tighten its grip on The Works has accused the retailer’s board of attempting to sway a crucial shareholder vote.

Kelso, a London-listed activist investor, has been locked in a weeks-long row with the arts and craft retailer, as it attempted to convince shareholders to appoint a former Card Factory executive to its board.

The Works had sought to slap down the investor’s efforts. It has refused to meet with Graeme Coulthard, the board hopeful, and warned shareholders that his presence on the board would “derail” its strategy. 

The Works prevailed when the motion was put to shareholders on Monday, as Coulthard’s board seat was refused by 51.6 per cent of the votes to 48.4.

But John Goold, Kelso’s chief executive, has accused the retailer’s board of inappropriately allowing its Employee Benefit Trust (EBT), which holds four per cent of the company to be issued as bonuses to its management, to determine the vote. 

He claims that the EBT – which is run by an independent board of trustees – has voted in line with The Works’ board and slapped down Coulthard’s bid for a board seat. 

Kelso: ‘I’m staggered’

Goold told City AM: “In these tight situations, they should not be voting. They definitely should not be deciding who wins.

“Anyone in the City will tell you [EBT] should not be deciding the result of a tight [vote] like this.”

A person close to The Works said that its EBT is administered by an independent trustee company. The board has no control over how it votes in shareholder motions, they said.

Speaking at the group’s Annual General Meeting, Goold praised the retailer’s “standout performance” in recent months, before saying that he was “very disappointed” by its board’s “aggressive reaction” to his push for Coulthard to gain a seat. 

What “should have been a day of celebration” had become engulfed by a “really quite needless fallout with a major shareholder”, he said. Goold later told City AM he was “staggered” by the alleged refusal of The Works’ board members to meet with Coulthard. 

During its row with the retailer, Kelso has accused chairman Steve Bellamy of switching his primary residence to New Zealand – where he is a citizen – and dialling in to crucial board meetings. 

But Bellamy hit back at these claims during the meeting, telling shareholders that Kelso’s accusations are “not correct”. He has remained a dual resident in New Zealand and the UK throughout his chairmanship, he said. 

‘Maybe he’s on the bus’

Kelso, which owns 10 per cent of The Works, voted for Bellamy to be ousted as chairman, though he dodged ejection by winning 77.6 per cent of the vote.

The row over boardroom attendance turned on Kelso, when a shareholder questioned why Coulthard had not attended the AGM. “Maybe he’s still on the 212 bus,” Bellamy replied. 

Goold told City AM that Coulthard chose not to attend. “There’s no point in having a debate with Graham when he’s there. The board did not speak to Graham ahead of this vote. They just took a view. I’m staggered by it.”

Commenting on Coulthard’s failed bid to gain a board seat, a spokesperson for The Works said: “While 48.39 per cent of votes cast in respect of Resolution 15 were in favour of Mr Coulthard’s appointment, the Board notes that these votes were from a small number of shareholders. 

“The Board is grateful for the support of its other shareholders who voted in accordance with its recommendations.”

Ahead of the vote, The Works had warned investors that Coulthard’s presence on the board would “create unnecessary distraction [and] risk derailing” the board’s growth strategy.